The rupee recovered from early lows to close higher by 13 paise at 71.14 against the US currency on Friday in line with firm local equities, defying gains in the greenback overseas and foreign capital outflows.
The rupee opened on a weak note and fell to a day’s low of 71.47 due to gains in the dollar and crude oil in global markets.
Foreign investors pulling out Rs 1,339 crore from equities on a net basis also weighed on the local unit.
However, a recovery in equity markets amid hopes of a sector-specific stimulus package by the government to arrest the slowdown in the economy helped the rupee pare losses and touch a high of 70.50 to the US dollar.
The local unit finally settled at 71.14 against the US dollar, showing a gain of 13 paise over the previous close. On Wednesday, the rupee had settled at 71.27 against the US dollar.
The forex market was closed on Thursday for the Independence Day.
On a weekly basis, the rupee lost 36 paise primarily due to heavy losses on Tuesday due to trade war concerns.
Forex traders said Prime Minister Narendra Modi taking stock of the economy helped boost investor sentiments. Modi on Thursday comprehensively reviewed the state of the economy with Finance Minister Nirmala Sitharaman amid a slowdown in various sectors.
There are expectations that the government would come out with sector-specific stimulus sometime soon.
Meanwhile, the 10-year government bond yield was at 6.54 per cent on Friday.
